Concho Resource (CXO) Update - May 4

[dan_s]

I have update my forecast/valuation model for CXO based on their Q1 results and updated guidance. I am still modeling it as a stand alone company, pre-merger with RSPP. I will work on RSPP next. Note that some of the analysts' reports submitted to Reuters do assume that the merger closes at the end of September, so there are big differences in the analysts' Q4 forecasts for Revenues, EPS and CFPS. I will work up a combined forecast model sometime late this quarter.

My valuation of CXO increases by $2.00 to $186.00/share. This compares to First Call's price target of $182.59.

Concho regularly "under-promises and over-delivers" when it comes to guidance, so I am assuming the upper end of their production guidance for my 2018 forecast. My bet is that they will once again crush their guidance.

Since the merger with RSPP was announced, five analysts have submitted forecasts to Reuters. They all rate it a BUY with price targets of $175 to $217.